₹250 Crore GST Scam Exposes Aadhaar Misuse in Multi-State Racket
A massive multi-state GST fraud has come to light involving fake firms and stolen identities—this time, the Aadhaar of a jobless man from Uttar Pradesh was used to generate fake GST registrations, enabling bogus input tax credit (ITC) claims worth ₹250 crore. Rajasthan police have arrested five key accused in this case.
The scam has once again highlighted how vulnerable GST registration and compliance systems remain to identity theft and document manipulation.
What Happened in This ₹250 Crore GST Fraud?
As per official reports:
- Fraudsters used stolen Aadhaar, PAN, and mobile numbers to register multiple fake firms on the GST portal.
- Police arrested 5 accused from Rajasthan, who were allegedly operating this racket across several states.
Source: Rajasthan Police & local GST officials (as per media reports)
How GST ID Fraud Happens: Key Loopholes
The fraud exposes gaps in the GST registration process:
| Step | Loophole Exploited |
|---|---|
| Aadhaar-based registration | Aadhaar OTP used without victim’s knowledge |
| PAN seeding | PAN cards scanned or obtained from leaked databases |
| Mobile OTP | SIM swap or number misuse |
| Bank details | Dummy or mule accounts used |
| E-invoice generation | Automated software used to fabricate invoices |
CBIC’s Efforts to Curb GST Registration Fraud
The CBIC and GSTN have taken several steps in the past year:
- CBIC Notification No. 26/2022 – Central Tax made Aadhaar authentication mandatory for new GST registrations.
- Rule 10A & 10B of CGST Rules require validation of bank accounts and PANs.
- Suspension provisions under Rule 21A allow automatic deactivation of suspicious GSTINs.
- Geotagging of business premises introduced during physical verification (as per SOP dated 20.11.2020).
Still, cases like this show enforcement needs to be stronger.
Expert Insight: How to Protect Your Aadhaar & PAN from GST Misuse
CA Ramesh K, GST Consultant, says:
“Many individuals are unaware their Aadhaar or PAN is misused until notices arrive. Always check your Aadhaar usage history on uidai.gov.in and monitor PAN-linked activities via Form 26AS and AIS.”
Here’s what you can do:
- Lock your Aadhaar biometrics via UIDAI portal
- Enable SMS/email alerts for Aadhaar usage
- Check your PAN-GSTIN linkage using GST Portal Search
- If misused, file a grievance with GSTN and lodge an FIR
Legal Provisions Involved in GST Fraud Cases
Such scams are dealt with under:
- Section 132 of CGST Act, 2017 – Punishment for issuing fake invoices, up to 5 years imprisonment
- Section 122 – Penalty of ₹10,000 or tax evaded, whichever is higher
- IPC Sections 420, 468, 471 – Cheating, forgery, and using forged documents
GSTN now flags suspicious registrations using AI-based risk profiling and mandates Aadhaar OTP verification plus biometric checks in high-risk zones.
What This Scam Means for Taxpayers & Consultants
- Jobseekers and low-income individuals: Risk of identity theft via data leaks
- CA firms and GST consultants: Must verify client KYC thoroughly
- Small businesses: Need to validate vendors’ GSTINs to avoid ITC issues
- E-commerce platforms: Must tighten vendor onboarding processes
Summary
A ₹250 crore multi-state GST fraud was uncovered involving fake firms registered using the Aadhaar of a jobless UP man. The scam exposes major loopholes in GST registration and Aadhaar authentication.
FAQs on Multi-State GST Fraud Using Aadhaar
Q1. Can Aadhaar be misused to obtain a GST registration?
Yes, if someone gains access to your Aadhaar and mobile OTP, they can fraudulently register a business in your name.
Q2. What should I do if I suspect my Aadhaar was misused?
Immediately lock your biometrics on UIDAI, file a police complaint, and report the GSTIN on the GST portal grievance section.
Q3. Are there legal protections against Aadhaar misuse?
Yes. Aadhaar Act and CGST Act provisions penalise fraudulent use, and victims can seek relief via FIR and UIDAI’s redressal.